TREASURY

Counter-Terrorism Act 2008 (Schedule 7)

Mark Hoban: Paragraph 38 of Schedule 7 to the Counter-Terrorism Act 2008 requires the Treasury to report to Parliament after each calendar year in which a direction under the schedule is at any time in force. This report provides details of the Treasury’s exercise of their functions under schedule 7 during the calendar year 2011.
	The Schedule 7 powers
	Schedule 7 provides HM Treasury with powers to implement a graduated range of financial restrictions in response to certain risks to the UK’s national interests. The risks it addresses are those posed by money laundering, terrorist financing and the proliferation of chemical, biological, radiological and nuclear weapons.
	Direction given under the powers in Schedule 7
	The Financial Restrictions (Iran) Order 2011 (“the Order”) came into force on 21 November 2011. The Order contains a direction by the Treasury requiring all UK financial and credit institutions to cease business relationships and transactions with all banks incorporated in Iran, including all subsidiaries and branches of such banks, wherever located, and the Central Bank of Iran.
	The direction was issued on the basis that activity in Iran that facilitates the development or production of nuclear weapons poses a significant risk to the national interests of the UK. Iranian banks play a crucial role in providing financial services to individuals and entities within Iran’s nuclear and ballistic missile programmes. Any Iranian bank is exposed to the risk of being used by proliferators in Iran’s nuclear and ballistic missile programmes.
	The Order was approved by the House of Lords on 12 December 2011 and by the House of Commons on 13 December 2011.
	Licensing
	Under paragraph 17 of schedule 7, the Treasury can exempt acts specified in a licence from the requirements of a direction requiring the cessation or limiting of transactions or business relationships between UK and Iranian banks.
	In operating the licensing regime in respect of the Order, the Treasury’s aim is to minimise the impact of the restrictions upon third parties, without compromising the objective of the direction.
	The Treasury issued six general licences on 21 November 2011:
	General Licence 1 permits existing and new transactions involving transfers of under €40,000 for humanitarian purposes;
	General Licence 2 allows personal remittances under €40,000;
	General Licence 3 permits existing or new transactions related to the provision of insurance permitted by EU Regulation 961/2010;
	General Licence 4 allows UK banks to continue to hold accounts for asset-frozen Iranian banks and credit payment to those accounts in accordance with EU Regulation 961/2010;
	General Licence 5 allows UK banks to continue to hold accounts of non-frozen Iranian banks, although they cannot process any transactions on these accounts; and
	General Licence 6 provided a seven-day grace period to allow payments in progress under existing contracts to be completed.
	Applications that fall outside the scope of the six general licences are assessed on a case-by-case basis. In making the decision to issue a licence, the Treasury upholds the objective of the restriction while seeking to minimise the impact on third parties.
	Between 21 November 2011 and 31 December 2011, four licences were granted and none refused:
	Two were granted to facilitate banks exiting their relationships with Iranian banks in accordance with the restrictions.
	Two more were issued to enable payments due under contracts agreed before the restrictions came into force to be made:
	one allowed a UK business to receive payment owed under an existing contract for the delivery of goods; and
	the other enabled an existing loan to be repaid.

FOREIGN AND COMMONWEALTH AFFAIRS

British Embassy (Liberia)

William Hague: In March 1991, at the outbreak of over a decade of civil war, Britain closed its embassy in Liberia. In 2003, a UK-based political officer began work again in Monrovia, reporting to and supervised by our High Commissioner in Sierra Leone. Today, I am pleased to announce the reopening of our embassy in Liberia.
	This follows the successful presidential elections at the end of last year, the inauguration of President Ellen Johnson Sirleaf in January, and my meeting with her in June 2011.
	Reopening a British embassy in Liberia strengthens our voice at a critical time and enables us to support the process of peace-building and national reconciliation in this important African country. Since the closure of our embassy in 1991, our influence in Liberia has been limited. A fully accredited ambassador will be able to work closely with President Johnson Sirleaf’s Government as they work to push forward her programme of reform and national reconciliation.
	The resources of a full embassy will enable us to provide more systematic and effective support to British trade and investment. Liberia’s economy is growing at over 6% per annum. The oil, mining and agriculture sectors are all set to expand rapidly over the next few years.
	This decision sends a strong signal of British diplomatic re-engagement with Liberia and the wider region. It follows the upgrading of our political office in Côte d'Ivoire to the status of a full embassy.
	As I said in Parliament on 11 May 2011, there will be no strategic shrinkage of Britain’s diplomatic influence overseas. I remain committed to extending the Foreign and Commonwealth Office’s global reach and building up British diplomatic influence in key regions of the world. Reopening the embassy in Liberia is part of that commitment.
	The reopening of the embassy will incur a marginal cost over and above the cost for a political office. This would be around £35,000 in the first year and £15,000 per annum after that. A limited consular service will be offered in Liberia. Our High Commission in Ghana will continue to provide a visa service as well as more substantive consular support when necessary. A fully accredited resident ambassador will take up residence in Liberia in autumn 2012.

European Union Act 2011 (Section 5)

David Lidington: A parliamentary statement has been laid before the House today, 2 February. This has been made pursuant to section 5 of the European Union Act 2011 as to whether the treaty concerning the accession of the Republic of Croatia to the European Union falls within section 4 of the EU Act.
	Copies of the parliamentary statement are available from the Vote Office and Printed Paper Office. Copies of the treaty have been deposited in the Library of the House.

HOME DEPARTMENT

Undercover Policing

Theresa May: Her Majesty’s Inspectorate of the Constabulary (HMIC) has today published its review into undercover policing entitled “A review of national police units which provide intelligence on criminality associated with protest”.
	The review was initiated by HMIC following revelations about the activities of Mark Kennedy, a police officer working undercover for the then National Public Order Intelligence Unit (NPOIU), that led to the collapse of the trial of six people accused of planning to shut down a large power station in Nottinghamshire.
	The report acknowledges that intelligence provided by undercover officers of the NPOIU enabled the police to prevent acts of the most serious violent nature.
	The report examines the systems used by NPOIU to authorise and control the development of intelligence and the oversight of the activities of individual undercover officers. The report found that NPOIU undercover operations were not as well controlled as those of other units that deploy undercover officers such as the Serious Organised Crime Agency, Her Majesty’s Revenue and Customs, the Security Service and the FBI. This was especially so in the case of Mark Kennedy.
	The report makes four recommendations to improve the controls and effectiveness of undercover policing of criminality associated with protest. The recommendations are as follows:
	Recommendation 1
	The arrangements for authorising those police undercover operations that present the most significant risks of intrusion within domestic extremism and public order policing should be improved as follows:
	(a) ACPO should give serious consideration to establishing a system of prior approval for pre-planned, long-term intelligence development operations subject to the agreement of the OSC.
	(b) The level of authorisation for long-term deployments of undercover police officers should be aligned with other highly intrusive tactics such as Property Interference, as defined by section 93 of the Police Act 1997, (subject to the legal requirements and the agreement of the OSC).
	In the interim:
	(c) Either a collaborative agreement should be entered into between police forces and MPS that allows one authorising officer within NDEU to own undercover operations from start to finish, or these operations should be managed in police forces by authorising officers that are:
	a. Properly trained and accredited. In particular this training should cover the concepts of necessity, intrusion, proportionality, disclosure and risk management.
	b. Fully briefed with all the relevant information.
	In making these changes, consideration will need to be given to ensuring the police have some flexibility to deploy covert resources at short notice where operationally necessary, and to minimising potential impacts on covert human intelligence (CHIS) work and police collaboration with partners.
	HMIC makes a number of further recommendations to improve the NPOIU’s management of the risk associated with intrusion (see recommendations 3 and 4 below).
	Recommendation 2
	In the absence of a tighter definition, ACPO and the Home Office should agree a definition of domestic extremism that reflects the severity of crimes that might warrant this title, and that includes serious disruption to the life of the community arising from criminal activity. This definition should give sufficient clarity to inform judgments relating to the appropriate use of covert techniques, while continuing to enable intelligence development work by police even where there is no imminent prospect of a prosecution. This should be included in the updated ACPO 2003 guidance.
	Recommendation 3
	The positioning of both public order intelligence and domestic extremism intelligence within the NDEU needs to be reconsidered. There will need to be an incremental transfer to any newly created hub for public order intelligence.
	Recommendation 4
	In recognition that undercover operations aimed at developing intelligence around serious criminality associated with domestic extremism and public order are inherently more risky, additional controls should be implemented as follows:
	(a) MPS and ACPO leads should adopt a practical framework for reviewing proposed operations or their continuation.
	(b) Authorising officers should conduct a thorough review of all undercover operations that last longer than six months. This review will be in addition to an independent review by the Surveillance Commissioners.
	(c) Subject to reconsideration of the public order component (see recommendation no.3), domestic extremism operations should continue to be managed within the existing regional counter-terrorism unit structure, and there should be oversight by an operational steering group representing a range of interests and agencies. External governance could be provided using arrangements similar to those employed by the counter-terrorism network.
	(d) The rationale for recording public order intelligence material on NDEU’s database should to be sufficient to provide assurance that its continued retention is necessary and justified given the level of intrusion into people’s privacy.
	(e) Exit plans should be an addendum to the risk assessment and should be reviewed by the authorising officer, and they should be considered by appropriately trained police cover officers and police-employed psychologists collectively, alongside risks to the operational strategy and welfare of undercover officers.
	(f) In order for safeguards to operate effectively consideration should be given to undercover officers waiving their right to confidentiality allowing the psychologist to brief managers of any concerns.
	(g) The 2003 ACPO guidance needs urgent revision taking account of the findings of this and other reviews.
	With the police, the Government will consider carefully the recommendations to ensure enhanced control of these undercover police officers in the future. Indeed, steps have already been taken to address some of the concerns. For example, the Metropolitan Police Service runs the National Domestic Extremism Unit (which now carries out the functions of NPOIU) on behalf of the police forces in England and Wales. This new arrangement came into effect in early 2011 and simplifies the scrutiny of the NDEU as it will be subject to the Metropolitan Police Service governance and accountability arrangements.
	I am grateful to Her Majesty’s Chief Inspector of Constabulary for his review. A copy of this report will be placed in Library of the House.

Justice and Home Affairs Post-Council Statement

Theresa May: Attending on behalf of the United Kingdom were my right hon. Friend the Secretary of State for Justice, the Scottish Minister for Community Safety and Legal Affairs Roseanna Cunningham MSP and myself. The following issues were discussed at the Council:
	The first plenary session focused on solidarity in immigration and asylum, considering the need for Council conclusions on a common framework for solidarity; the trigger for solidarity measures; whether the agencies should have a strengthened role; whether there should be intra-EU relocation of refugees; and whether a framework should include Schengen and third-country co-operation. The UN Refugee Agency (UNHCR) said that the starting point for all should be to meet existing obligations, alongside burden-sharing. Within the EU joint asylum processing and voluntary relocation would be welcome, while there was a need for external action to strengthen resettlement and develop regional protection pilots. There was also a need to ensure that improved management of migration at the borders was sensitive to the needs of refugees and asylum seekers.
	The Commission said that assistance could be provided within the framework of the Common European Asylum System (CEAS) but solidarity was also about keeping one’s own house in order. Commissioner Malmström supported a soft-law framework plus the early warning system, but any mechanism should be on the request of the member state with consideration by the European Asylum Support Office (EASO) and the Commission. She noted that the EU agencies could only work within their competence and co-ordination could only be done by the Commission. She also urged support for the voluntary relocation scheme and noted there was a link between Schengen and solidarity, against which evaluation of the former needed to be strengthened. The chair of the European Parliament (EP) Civil Liberties Committee emphasised the need to keep international protection distinguished from migration. They had consistently made the case for internal relocation and wanted the European Parliament to be informed at the earliest stage of early warning systems.
	Many member states intervened to emphasise that solidarity depended on trust and should not detract from responsibility, which included investing in appropriate systems to manage changes in migration flows. The UK agreed that the need to have a functioning domestic system was the basic building block, without which real solidarity was impossible. The UK also expressed caution over EASO’s role being further developed at this stage and would not support an extension of relocation beyond the Malta pilot project, at least before it was evaluated. The UK said that relocation simply moved the problem around Europe rather than addressing the underlying problems. The UK also welcomed the presence of Turkey at the Council, with whom it supported strengthened co-operation. The majority of member states’ interventions supported the creation of a framework for solidarity in the form of Council conclusions and supported the inclusion of co-operation with third countries and consideration of Schengen within the proposed framework.
	The presidency concluded that solidarity was dependent on trust and that a framework would be useful as a supplement to an early warning system. There was support for including components related to Schengen and co-operation with third countries and there was a place for strengthening the agencies. They noted there was not support for relocation. They committed to preparing draft conclusions in March which they hoped would unlock negotiations on the Dublin regulation. The task would then be to turn them into results by June. They noted it was closely linked to better political management of Schengen which would go to the March JHA Council.
	In the light of the review of the family reunification directive, over lunch Ministers discussed the challenges facing them with respect to family reunification.
	The next plenary session focused on the financing of passenger name records (PNR) under the proposed directive on the collection and sharing of PNR between member states. The presidency noted that, while the starting point for the implementation of EU policies was that member states took the cost of implementation, the EU could sometimes meet set-up costs. The Commission said they were willing to co-finance set-up costs in this case but could not finance running costs or all set-up costs. They had allocated €50 million (£41.76 million) for 2012 and fully intended to finance it in the future, via the new Internal Security Fund, currently under
	negotiation. The UK reiterated the importance of an EU PNR system for fighting terrorism and organised crime. Given its benefits the UK hoped the finance issue would be resolved and offered its own experience to assist others in helping to reduce their costs.
	The majority of member states intervened to support funding from the EU financial instruments, with most supporting an explicit reference in the text of the new Internal Security Fund instrument. The European Parliament said that the issue for it was not cost, but noted that cost could affect them. The European Parliament believed that excluding EU internal flights from the scope of the directive would be cheaper. The presidency concluded there was general agreement to use the Internal Security Fund for funding for PNR, but member states needed reassurance that substantial financial support would be available. Discussions on the directive and Internal Security Fund will continue at expert level.
	The Justice day commenced with a discussion on the Brussels I regulation, where the presidency invited delegations to discuss the proposed rules of jurisdiction in cases involving defendants in non-EU member states. The UK did not see any evidence of practical problems with the current arrangements, whereby national rules applied to such cases. Most other member states thought there was no need to extend the rules of jurisdiction in Brussels I to such cases. The presidency concluded that further work should be taken forward on basis of maintenance of the status quo.
	This was followed by a discussion on criminal sanctions in the context of the current proposal for a directive on insider dealing and market manipulation. Ministers
	were asked to consider whether a provision for minimum levels of maximum penalties should be included in the proposed directive, and whether there should, as a rule, be provision for minimum-maximum levels of sanctions in future criminal law directives. The Commission stated that there must be respect for subsidiarity and proportionality and that there was no need for such a rule in the directive. The UK supported the Commission’s approach and felt that the first priority was for some criminal provision to be in place so that it was clear that the conduct would be treated as a serious offence. The UK also stressed the importance of enforcement and that having the options of both a criminal and civil approach would aid prosecutors, bearing in mind that criminal offences were harder to prove. The presidency concluded that the majority of states considered that having no specific minimum-maximum sanctions would be the right approach and that the question of sanctions in future instruments should be considered on a case by case basis.
	During the ministerial lunch there was a discussion on the transfer of sentenced persons and social rehabilitation. Member states reviewed implementation so far of the framework decision on transfer of sentenced persons. Most states are in the process of implementation. There was widespread agreement that additional legislative measures to facilitate implementation were unnecessary, but that practical measures to activate the process must be addressed. The UK supports the framework decision so that foreign national offenders are able to serve their sentences in their own country to facilitate their eventual reintegration into the community in which they will live.